British workers remained worse off last year than before the financial crisis and there is little hope of a decent pickup in living standards, according to the Institute for Fiscal Studies.
Real median employee earnings in 2016-17 were as much as 3 percent below their 2007-08 level.
Separate figures from the Office for National Statistics Wednesday show the average annual income of the richest fifth of households was £88,800 in 2016-17 -- 12 times greater than that of the poorest fifth. The ratio falls to less than four after accounting for benefits and taxes.
The top 10%, the highest earning 1% fared the best, increasing their share of total income from 5.7% in 1990 to 7.8% in 2016–17.
The average household income per head, once taxes and benefits are taken into account, is only £12,232 in Nottingham, compared to £58,816 in Kensington and Chelsea, and Hammersmith and Fulham in west London.
The IFS said it was difficult to argue that the higher minimum wage had offset benefit cuts, saying it was “rather tenuous” when the policy had often raised the incomes of second earners from middle-income families and was therefore “not particularly well targeted at low-income households”.
The IFS said: “Overall, income inequality is substantially higher than it was in the 1960s, but roughly unchanged from the 1990s. If the Office for Budget Responsibility’s forecasts are correct, inequality is likely to increase in the next few years.”
The IFS said that broadly stable income inequality since the 1990s was the result of two offsetting trends: “The top 1% have received an increasing share of total income, but inequality among the bottom 99% of the distribution has fallen somewhat – partly due to slow income growth towards the top since the recession.”
The report also highlighted the plight of people with longstanding mental health problems, who are twice as likely to be in poverty.
Finding that as many as 40% of adults across Britain with a mental health problem are in relative poverty, the IFS said this compares to 18% for the rest of the population.
About 1.3 million people said they had a longstanding problem with their mental health last year, up by about 250,000 from 2014.